FEATURE: Shaw finds its focus

Momentum building as company concentrates on connectivity

CALGARY – If you say “Yo, Adrian” to Shaw’s new Blue Sky TV voice-activated remote, every Rocky movie the system can find will be displayed on your TV – along with some suggestions of other titles you might like, alongside their Rotten Tomato scores.

It’s hard not to be impressed with such a neat trick, and it’s one which any Shaw Blue Sky TV customer can do in their homes, right now, thanks to the years and millions of hours of work done by thousands of Comcast Corp. developers. To this eye (or ear), it seems far better than Siri, or Cortana, or Alexa – at least when it comes to searching for entertainment.

Say “show me the Blue Jays” and the Jays game will come on. Say “turn on the news” and it will show you a menu of news. Say the word “love” and it’ll show you love stories. The old grid guide is dead (even though it remains an option with Blue Sky, if you really need to search that way).

It’s also thanks to a total overhaul of the Shaw network over the past three years so that 99.2% of its homes passed can access to its primary Shaw 150 broadband package which includes 150 Mbps download speeds, 15 Mbps upload, and 1 TB of data each month, for a price of $49.90 per month for the first year and $84.90 after that.

It was not an easy thing for a company the size of Shaw, with a lengthy history of cable innovation dating back to founder JR Shaw’s launch of Capital Cable in Edmonton in 1966, to announce in 2015 that it was abandoning the development of its own next-generation TV technology in order to follow Comcast and its X1 platform roadmap. It had to admit that even as a C$14 billion company serving over 2.5 million TV, Internet, phone and satellite TV customers that it was not big enough to keep up with the technological developments sweeping the video landscape across the globe.

It’s a conclusion that both Cox Communications (6 million subs) and Rogers Communications have also come to in casting their lot with X1 as well. It helps that Comcast, thanks to X1, added close to 200,000 video customers last year.

Three years ago and facing losses of tens of thousands of subscribers to the new, slick kid in town, Telus’ Optik TV, Shaw pivoted, as its senior executives like to say, to something they call “Focus to Deliver”. That has developed into a number of steps, from rolling out tens of thousands (about 90,000 now) new Wi-Fi zones as it completely overhauled its network, to the launch of X1 capabilities, first with FreeRange TV and then Blue Sky, to the sale of Shaw Media and the purchase of Freedom Mobile.

The shift has led the company away from being a vertically integrated network and media conglomerate to one worried only about connectivity and customer service. It has also reduced subscriber churn and slowed customer losses.

Three years ago, remembers Jim Little, Shaw’s EVP and chief marketing and culture officer, and Zoran Stakic, its chief technology officer, company executives saw what Comcast and other massive players were doing and realized “we’re just too small to innovate at that rate,” said Stakic (pictured, right) in an interview earlier this month at Shaw’s Calgary headquarters.

So, they went to work – first on the network. “We didn't launch 150 as a one time event,” he continued in the interview. “It actually took two years to build a powerful network with little or no congestion at this point. Our congestion rate is 0.1% which I don't think anyone in the industry, or only few, can say they have.”

Stakic and his team undertook a deep analysis of the entire network infrastructure to make sure any and all choke points were eliminated – at a level of granularity not pursued before.

“We were struggling with the network performance,” he explained, “so you usually look for silver bullet, but unfortunately, that's not the case. There is no one thing you can do. We assessed the whole performance of network and found 16 variables that impact its performance. We calculated for each of them, what kind of impact they make, what is the logical sequence of (fixing) each of them, what is the cost and how much of a benefit do you get.”

He used node splits as an example to explain. While Stakic declined to say how many homes per node is Shaw’s benchmark, network engineers have historically averaged their number of homes on each node while assessing performance. So, if an overall target is 300/node, a cable network operator may have nodes with 100 homes serviced and some with 1200. “So, my average will look great, but I will have terrible service in certain neighbourhoods, right?” Stakic says. “So, I didn’t really do a good job in that (scenario).”

That meant the technical team and executives inside the company had to start thinking differently about traditional key performance indicators like this and to work far more specifically, “understanding the layers below and being very smart about how we achieve that KPI… those are some of the cultural changes in the way we think about taking care of the network,” said Stakic.

“It was like a clean start.” – Jim Little, Shaw Communications

Beyond the network itself (which still has to handle all of the legacy linear TV signals while the goal is to be all-IP soon, but they won’t say when just yet), Shaw also built brand new business support systems, which included new billing, management and provisioning software, for example.

“It was like a clean start,” added Little, all of which will enable a switch to IP when they decide it’s time. Its VOD environment is already all IP, but since it has already done the work in the back office and network, future improvements are not of the forklift variety, nor will the company have to try and stretch its legacy back office systems to fit the new realities.

“The launch of 150 was our moment,” says Little. “the beginning of us having the right stuff at the right price to provide the right solution for the customer… (But) before we did anything. The network remediation plan that Zoran and his team drove, gives us the flexibility for this,” added Little (pictured, right).

Now, with a far more robust network providing speed and reliability to customers – Blue Sky TV is a huge leap forward and now a serious challenge to Optik – especially with that voice remote.

Telus has responded in the market, too, with pricing changes and the launch of a brand new skinny video product called PikTV.

The challenge, as with any new service, is to convince customers who may be happy with what they have, to upgrade (or to switch, if they are with Telus) to Blue Sky. It’s not like selling the newest iPhone or Xbox or Honda – this is a service which needs to be experienced to be understood. While Little says it is too early for the company to release any numbers on Blue Sky uptake, anecdotal reports from the field say the new systems are flying out the door (installs take about 90 minutes, on average) and the voice remote, when experienced in a store or in one of its traveling displays, is the driver.

“Our first target is TV lovers,” says Little. “We've identified them by region, by segment and by persona. We know these people love TV. We know that the TV we're about to give them is better than what they've got. We actually think it's the best TV product in the country… It’s been a fairly easy sell once you get people into a demo.

“That's a very strong signal X1 will become a home automation platform.” – Zoran Stakic, Shaw Communications

“It's futuristic with the guide and with interface and with the remote. The aggregation factor, once you've got YouTube and Netflix built in (both are coming very soon to Blue Sky TV), these will no longer be apps sitting outside where you have to plug and unplug. The absolute world… is in your voice remote. Two billion YouTube assets, hundreds of thousands of other Netflix and related services, all at the end of a voice remote command.”

Other fun things are on the way, too. Comcast customers can now ask their remote “What’s that tune” when they hear music in TV or movies and the system will show the artist and title. XFi (a new way for customers to control their in-home Wi-Fi), has also been rolled out, Stateside, and those will come to Shaw, too.

The next iteration of X1 will also see the system’s in-home footprint get more powerful – yet smaller. The coming XB6 gateway is a whole-home broadband gateway which places the DVR in the cloud, and replaces the existing set top boxes with tiny ones about as large as two decks of cards, and which actually comes with an envelope to attach to the back of customers’ TVs, so they are completely out of sight. Comcast also recently purchased a company called IControl Networks, which points further to its Internet of Things, connected home future. “That's a very strong signal X1 will become a home automation platform,” said Stakic.

While X1 can’t be deployed via satellite, meaning the company’s Shaw Direct rural subscriber base won’t get a voice remote of their own (even with planned upgrades coming on the satellite front this summer), those customers can go mobile with FreeRange TV, which is an X1 powered app.

TWO OTHER MOVES POWERING the new Shaw have been the divestiture of Shaw Media last year and the acquisition of Freedom Mobile. One allows the company to make purer decisions on the content front, and the other means the company could bundle wireless in with its existing suite of products, as its primary competitor does.

Too early to say that though, said Little. The recent executive changes at the top of Freedom, bringing it fully inside the Shaw tent as a product line and not a stand alone division, point in that direction, however, despite the fact Freedom does not own wireless spectrum in all regions of the Shaw wireline footprint. “How do you integrate? Are there bundling capabilities? Are these bundles and brands segment-focused? Are they product focused? All of that, I would say we are knee-deep in now,” Little explained. “The fun part is going to be ‘what are the combinations that are possible that bring more revenue and more people, more services.’ We're early days there but we're certainly thinking about it.”

When asked whether no longer having to worry about a traditional television division has also been helpful to Shaw now, Little pointed to what happened to former streaming portal shomi as an example of how technological and consumer change drives shifting strategies and cause new thinking – at least at this formerly vertically integrated company.

“They're on the same couch, watching some version of their big screen TV. That's still what people want to do.” – Little

The demise of shomi revealed how different the OTT world can be. “We had nearly a million shomi subscribers (and) they were the most loyal customers… They were our top 10 or 20% best, most sticky customer. Shomi's structure, however, the content, the marketing, the costs, literally made the economic model super hard to deliver,” recounted Little.

“The other thing we learned is the world in and around Shomi and Netflix and Amazon and Hulu is a transactional world. (Users) come in and out and in and out and for old cable people, we were like, ‘whoa!’

“We actually underestimated how many Canadians you would need to keep filling that funnel all the time. In the end, as you looked out three years, we could have done this for a while, Rogers and us. We had two to three meetings and said, ‘There was just no horizon that actually filled that funnel fast enough for this to actually become economically viable’.”

As for no longer having a media division, “we've got a focus now that we didn't have,” explained Little. “As a vertically integrated company we had to worry about all steps in the value chain (but) we are far more singularly focused now on providing enhanced connectivity to as many people in our footprint as possible and that's now through Wi-Fi, wireless, internet, best new video product and what else is to come,” says Little. An OTT service like Netflix is essentially just another TV channel to be integrated, and not a competitor for viewers.

“They were the enemy three years ago. We literally would have meetings about what to do,” he recalled. “Now, I was on a call about two months ago with 40 CMOs from cable companies and the like. We had this conversation wondering, ‘Why did we do that?’ We had, and have, the customers. They're on the same couch, watching some version of their big screen TV. That's still what people want to do.”

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